A favorable direct materials price variance might lead to an unfavorable direct materials quantity variance because the company purchased cheap materials.

Question

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If a company purchases cheaper materials, it may lead to a favorable price variance. However, if the cheaper materials are of lower quality or quantity, this may lead to a higher rate of waste, rework, or defects, resulting in an unfavorable quantity variance.

A Favorable Direct Materials Price Variance Might Lead to an Unfavorable